Plug-In Hybrid Electric Vehicle Market Penetration Scenarios
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PNNL-17441 Plug-in Hybrid Electric Vehicle Market Penetration Scenarios P. J. Balducci September 2008 DISCLAIMER This report was prepared as an account of work sponsored by an agency of the United States Government. Neither the United States Government nor any agency thereof, nor Battelle Memorial Institute, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency thereof, or Battelle Memorial Institute. 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(9/2003) PNNL-17441 Plug-In Hybrid Electric Vehicle Market Penetration Scenarios PJ Balducci September 2008 Prepared for the U.S. Department of Energy under Contract DE-AC05-76RL01830 Pacific Northwest National Laboratory Richland, Washington 99352 Summary This report examines the economic drivers, technology constraints, and market potential for plug-in hybrid electric vehicles (PHEVs) in the U.S. A PHEV is a hybrid vehicle with batteries that can be recharged by connecting to the grid and an internal combustion engine that can be activated when batteries need recharging. The PHEV offers the range of existing hybrid vehicles, while potentially offering the cost savings and energy benefits of electric vehicles. When considering whether to purchase PHEVs, consumers must weigh the benefits of reduced energy consumption against the cost premium for the PHEV technology. As the cost premium is reduced over time, the PHEV will become more attractive to consumers. There still remain technical questions surrounding the ability of the battery and automotive industries to meet the demand for PHEVs given the current reliance on internal combustion technology and uncertainty associated with the battery technology required to support PHEV development. This report attempts to address some of these questions by presenting and examining a series of PHEV market penetration scenarios. Based on input received from technical experts and industry representatives contacted for this report and data obtained through a literature review, annual market penetration rates for PHEVs were forecast from 2013 through 2045 for three scenarios. The assumptions underlying the three scenarios are highlighted in Table 1. Table 1. PHEV Market Penetration Scenarios Scenario Assumptions - PHEV forecast built off existing market forecasts of hybrid technology Hybrid according to Greene et al. (2004) with PHEV shares of the hybrid market Technology- estimated in EPRI and NRDC (2007). Based Assessment - PHEV technology development accelerated as a result of advancements made in hybrid technology. - Delphi approach asking domain experts for their best judgment, given the following conditions: - $4,000 marginal cost of PHEV technology over existing hybrid technology R&D Goals - 40 mile all electric range Achieved - 100 miles per gallon equivalent - PHEV batteries meet industry standards regarding economic life and safety - Tax incentives, regulations and technical standards favor PHEVs. - Infusion of PHEVs in marketplace constrained by automotive and battery Supply manufacturers’ ability to meet surging demand. Constrained - Existing idle off-peak capacity of electric infrastructure able to meet the demand placed on it by 73% of light-duty vehicles in the U.S. Under the Hybrid Technology-Based Assessment scenario, market penetration is forecast to reach 9.7% by 2023 and 11.9% by 2035. Under the R&D Goals Achieved scenario, PHEV iii market penetration is forecast to ultimately reach 30%, with 9.9% achieved by 2023 and 27.8% reached by 2035. Finally, the Supply Constrained scenario is forecast to achieve 73% market penetration, with 26.9% reached by 2023, and 68.4% reached by 2035. Barriers to market penetration considered in this report include price, vehicle dependability, battery reliability, battery technology and supply, automotive design, re-design of the manufacturing process, supply chain management, engineering capabilities, raw material constraints, and idle off-peak capacity of electric infrastructure. These technical hurdles are considered within the framework of PHEV market penetration, which is forecast to be characterized by a logistic function or s-shaped curve. iv Contents Summary........................................................................................................................................... iii 1.0 Introduction ................................................................................................................................1 2.0 Market Penetration of Hybrid Vehicles and PHEVs ..................................................................2 2.1 Hybrid Vehicle Market Penetration Forecasts ...................................................................2 2.2 Technology Adoption Rates...............................................................................................4 3.0 PHEV Market Penetration Scenarios..........................................................................................6 4.0 Conclusions ..............................................................................................................................11 5.0 References ................................................................................................................................13 APPENDIX – Forecast Market Penetration Rates (2013-2045).......................................................14 v Figures Figure 1. Hybrid Market Penetration Forecasts ..................................................................................3 Figure 2. Quadrants in PHEV Market Penetration Curve..................................................................8 Tables Table 1. PHEV Market Penetration Scenarios................................................................................. iii Table 2. EPRI and NRDC PHEV Market Penetration Forecast ........................................................4 Table 3. Time Required to Advance from 0% to 10% Market Penetration.......................................4 Table 4. Time Required to Advance from 10% to 90% Market Penetration.....................................5 Table 5. PHEV Market Penetration Scenarios...................................................................................6 Table 6. Industry Representatives and Technical Experts Interviewed for this Report.....................7 Table 7. PHEV Market Penetration Findings ..................................................................................10 vi 1.0 Introduction This report examines the economic drivers, technology constraints, and market potential for plug-in hybrid electric vehicles (PHEVs) in the U.S. A PHEV is a hybrid vehicle with batteries that can be recharged by connecting to the grid and an internal combustion engine that can be activated when batteries need recharging. The PHEV offers the range of existing hybrid vehicles, while potentially offering the cost savings and energy benefits of electric vehicles. PHEVs could diversify the fuel sources used for automobiles, and enhance energy security by reducing dependence on foreign oil. The PHEV is an effective design for reducing energy consumption. It takes advantage of idle off-peak capacity of electric infrastructure (Kintner-Meyer et al. 2007). Further, based on American travel profiles, a PHEV with a 30-mile range would enable an average of 60% of the motoring public to entirely avoid motor fuel consumption each day (Alliance Bernstein 2006). The low carbon profile of PHEVs is also attractive, although the cost and source of fuel used to generate electricity varies by region in the U.S. Thus, the advantages offered by PHEVs will vary based on where you live. When considering whether to purchase PHEVs, consumers must weigh the benefits of reduced energy consumption against the cost premium for the PHEV technology. Because the cost premium is reduced over time, the PHEV will become more attractive to consumers. There still remain technical questions surrounding the ability of the battery and automotive industries to meet the demand for PHEVs given the current reliance on internal combustion technology and uncertainty associated with the battery technology required to support PHEV development. This report attempts to address some of these questions by presenting and examining a series of PHEV market penetration scenarios.